Starting the review of the ESAs and of their (increased) powers

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To say that the Commission’s legislative proposal on the review of the European Supervisory Authorities (ESAs) raised some eyebrows might be an understatement.

When ECOFIN Ministers discussed the text in November, the skepticism regarding the planned new far-reaching powers of the ESAs was abundant. Indeed the Commission proposed among others to hand over to the ESAs final decision making regarding the authorization of delegation to third countries, the authorization of several investment fund categories (ELTIFs, EUVECAs and EUSEFs) as well as the authorization of prospectuses from third country issuers. On the governance side vast decision making powers would be conferred on a new executive board composed of a handful of powerful high-ranking ESA staff instead of the representatives of the (national) competent authorities.

In the European Parliament, the co-legislator with the Council, a short working document has been published by the two co-rapporteurs earlier this week and on Wednesday a first exchange of views took place in the relevant parliamentary committee. During this one hour long debate, the relationship between the ESAs and the (national) competent authorities took center stage with representatives from the big center-right parties (EPP and ECR) as well as from the liberals expressing some doubts on increasing significantly the ESAs’ powers while support came from the center left speaker. It would nevertheless be naïve to see this debate exclusively through a political party lens. It also is very much a debate shaped by national interests with many Member States loosing sovereignty in the sensitive area of financial services. One element nevertheless seems to have found agreement among members of the European Parliament expressing their views: a merger of the three ESAs was not on the agenda despite or maybe because Paris will in the future be housing as well ESMA (securities markets) as EBA (banking).